Ansell Limited · ASX:ANN
Ansell — Merger or Acquisition (November 2013)
47 slides from Ansell's merger presentation, Nov 26, 2013
Slide 1: Acquisition of BarrierSafe Solutions International and associated equity raising
For personal use only Ansell Limited Acquisition of BarrierSafe Solutions International November 2013 and associated equity raising NOT FOR RELEASE IN THE UNITED STATES
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER For personal use only This presentation has been prepared by Ansell Limited (ABN 89 004 085 330) (“Ansell” or “Company”). Summary information This presentation contains summary information about Ansell and its subsidiaries and their activities current as at 26 Novembe
Slide 3: Contents
CONTENTS For personal use only 1. EXECUTIVE SUMMARY 2. OVERVIEW OF ANSELL TODAY 3. BARRIERSAFE SOLUTIONS INTERNATIONAL ("BSSI") ACQUISITION 4. OVERVIEW OF BSSI 5. STRATEGIC RATIONALE 6. IMPACT OF THE ACQUISITION ON ANSELL 7. ANSELL TRADING UPDATE AND F'14 OUTLOOK 8. ACQUISITION FUNDING 9. CONCLUSION
Slide 4: Executive Summary
1. EXECUTIVE SUMMARY For personal use only • Ansell has delivered 10 years of EPS growth and created shareholder value by building market leading positions in the industrial and medical hand protection and sexual wellness markets • In the last 3 years the significant focus on rejuvenating Ansell’s i
Slide 5: 2. Overview of Ansell Today
For personal use only 2. OVERVIEW OF ANSELL TODAY 5
Slide 6: Building on track record of EPS growth, Ansell accelerating value creation
BUILDING ON 10 YEAR TRACK RECORD OF EPS GROWTH, ANSELL IS ACCELERATING VALUE CREATION THROUGH FASTER For personal use only SALES GROWTH AND STRATEGIC DEPLOYMENT OF CASH FLOW 6
Slide 7: Ansell is well positioned to drive organic growth
ANSELL IS WELL POSITIONED TO DRIVE ORGANIC For personal use only GROWTH STRONG POSITIONS IN INVESTING TO REALISE STRONG GLOBAL ATTRACTIVE MARKETS GROWTH POTENTIAL CAPABILITIES • #1 or 2 globally in each of our • Increasing focus & investment • New product launches up 4 fold major businesses1 on inno
Slide 8: Acquisition strategy guided by three priorities
ACQUISITION STRATEGY GUIDED BY THREE PRIORITIES. RECENT ACQUISITIONS COLLECTIVELY ON TARGET AND For personal use only EXPECTED TO EXCEED RETURN HURDLES 2. NEW TECHNOLOGIES AND CAPABILITIES ACHIEVED • US$75m specialist clothing business created 1. ECONOMIES OF SCALE BENEFITS through ANSELL Protective
Slide 9: Acquisitions, organic growth and operational excellence drive profitability
ACQUISITIONS, ORGANIC GROWTH AND A FOCUS ON OPERATIONAL EXCELLENCE For personal use only ALL DRIVE GROWTH IN PROFITABILITY ACQUISITIONS ARE ORGANIC GROWTH IS OPERATIONAL EXCELLENCE IS DRIVING PROFITABILITY THROUGH: DRIVING PROFITABILITY THROUGH: DRIVING PROFITABILITY THROUGH: • Realising cost synerg
Slide 10: Strong cash flow
STRONG CASH FLOW For personal use only • Investments made in high payback productivity investments, increased supply chain flexibility and modern enterprise resource planning ("ERP") systems, are all expected to improve Ansell’s cash flow generation • Significant working capital improvement opportun
Slide 11: Disciplined and strategic capital deployment
DISCIPLINED & STRATEGIC CAPITAL DEPLOYMENT For personal use only • Priority for capital deployment will remain investing for growth • Capital investments in organic growth and productivity improvements such as automation or new high yield production lines are targeted to deliver after-tax returns in
Slide 12: 3. BarrierSafe Solutions International (BSSI) Acquisition
For personal use only 3. BARRIERSAFE SOLUTIONS INTERNATIONAL ("BSSI") ACQUISITION 12
Slide 13: Acquisition Summary
ACQUISITION SUMMARY For personal use only • Ansell has agreed to acquire BarrierSafe Solutions International and its subsidiaries (collectively “BarrierSafe” or "BSSI"), a leading North American provider of single-use gloves that also has a position in the North American protective footwear category
Slide 14: 4. Overview of BSSI
For personal use only 4. OVERVIEW OF BSSI 14
Slide 15: Overview and History of BSSI
OVERVIEW AND HISTORY OF BSSI For personal use only BSSI is a leading North American provider of single-use gloves and also has a position in protective footwear BSSI has delivered strong growth through high quality customer service, product innovation and an efficient supply chain model • The manufa
Slide 16: BSSI's Microflex brand is a leading single-use glove brand in the US
BSSI’S MICROFLEX® BRAND IS A LEADING SINGLE-USE GLOVE BRAND IN THE US AND ONGUARDTM IS WELL RECOGNISED IN For personal use only PROTECTIVE FOOTWEAR Brand Market position Key brand families #1 in Industrial Nitrile #1 in Life Sciences gloves #1 in Dental #1 in Auto Aftermarket Latex gloves #1 in EMS
Slide 17: Strong financial performance delivering revenue growth
STRONG FINANCIAL PERFORMANCE DELIVERING REVENUE GROWTH AND LEVERAGING AN EFFICIENT SUPPLY CHAIN For personal use only In the 12 months to October 2013, BSSI generated US$285 million in revenue and US$64 million in EBITDA3 Historical revenue (US$m)3 Strong historical financial performance with a reve
Slide 18: Primary revenue source is single-use gloves to attractive market verticals
PRIMARY REVENUE SOURCE IS SINGLE-USE GLOVES TO A WIDE RANGE OF ATTRACTIVE MARKET VERTICALS For personal use only By Product Category By End Market Global Business Unit CY12 revenues CY12 revenues █ Industrial █ Specialty Markets Apparel █ Medical & other Dental Protective 2% Single-use 12% Industria
Slide 19: 5. Strategic Rationale
For personal use only 5. STRATEGIC RATIONALE 19
Slide 20: Strategic Rationale
STRATEGIC RATIONALE For personal use only • BSSI’s core strengths fit well with Ansell’s strategic priorities BSSI is a strategic fit for • Both businesses share a focus on winning in differentiated market verticals where strong brands and innovation Ansell focused on demanding end user requirements
Slide 21: 6. Impact of the Acquisition on Ansell
For personal use only 6. IMPACT OF THE ACQUISITION ON ANSELL 21
Slide 22: BSSI addresses Ansell's under-representation in the US market
BSSI ADDRESSES ANSELL’S UNDER-REPRESENTATION IN THE US MARKET For personal use only Single-use gloves – US hand protection market Verticals BSSI* Ansell Combined Market Size (2012) Growth* (US$m)* (2012-2017) #1 <10% share #1 435 ~3% Industrial #1 Minor position #1 229 2 to 3% Life Sciences #1 Minor
Slide 23: Combined Key Financials
COMBINED KEY FINANCIALS For personal use only Pro-forma combined contribution1 (F'13; US$m) 1,655 255 219 100% 90% 282 48 57 80% 70% 60% 50% 40% 1,373 171 198 30% 20% 10% 0% Revenue EBITDA EBIT Ansell BarrierSafe Source: BSSI Management, Ansell Management Note: 1. BSSI financials for the 12 months t
Slide 24: Revenue Composition by Region
REVENUE COMPOSITION BY REGION For personal use only Ansell pre-acquisition Ansell pro-forma for BSSI (F'13) (F'13 pro-forma)1,2 Latin Latin America America 7% 6% EMEA Asia 35% EMEA Pacific Asia 42% 17% Pacific 20% North North America America 31% 42% Source: BSSI Management, Ansell Management Notes:
Slide 25: Synergies and EPS Accretion
SYNERGIES AND EPS ACCRETION For personal use only • On a normalised basis, excluding non-recurring costs1,2, the acquisition is expected to be accretive to EPS in the low-single digit % in F'14 and in the mid-single digit % in F'15 • After including non-recurring costs1,2, the acquisition is expecte
Slide 26: Combined Pro-forma Balance Sheet
COMBINED PRO-FORMA BALANCE SHEET For personal use only Pro-forma Pro-forma adjustments Pro-forma adjustments for Pro-forma US$m (F'13) Ansell BSSI for acquisition1 debt, Placement and SPP2 FY13 Cash 305 – (623) 691 374 Receivables 235 31 – – 266 Inventories 260 58 – – 318 Other current assets 28 1 –
Slide 27: Combined pro-forma gearing metrics
Combined pro-forma gearing metrics For personal use only Pro-forma Pro-forma adjustments Pro-forma F'13 Ansell1 BSSI2 for acquisition3 Pro-forma F'13 Net debt (US$m) 235.5 – 231.24 466.7 EBITDA (US$m) 197.5 57.4 – 254.9 Net interest (US$m) 10.7 – 12.75 23.4 Net debt / EBITDA 1.2x 1.8x Interest cover
Slide 28: 7. Ansell Trading Update and F'14 Outlook
For personal use only 7. ANSELL TRADING UPDATE AND F'14 OUTLOOK 28
Slide 29: Trading Update and F'14 Outlook
TRADING UPDATE AND F'14 OUTLOOK For personal use only • The Ansell business has continued to perform in line with the expectations outlined during the October AGM, with encouraging evidence of building momentum in hand protection organic growth arising from success with new products • Absent the acq
Slide 30: 8. Acquisition Funding
For personal use only 8. ACQUISITION FUNDING 30
Slide 31: Acquisition Funding
ACQUISITION FUNDING For personal use only The acquisition of BSSI and associated transaction costs are to be funded through a combination of: • Equity • Institutional placement and SPP to raise up to A$438 million (c.US$400 million1) comprising: – c.A$338 million fully underwritten institutional pla
Slide 32: Placement and SPP
PLACEMENT AND SPP For personal use only • Placement • Fixed issue price of A$18.50 (“Placement Price”) per share (“New Share”) • The Placement Price per New Share represents a discount of 4.9% to the last closing price on 25 November 2013 • New Shares will rank equally with existing shares • The Pla
Slide 33: Placement Timetable
PLACEMENT TIMETABLE For personal use only Placement Date Commence trading halt 26 November 2013 Placement bookbuild 26 November 2013 Trading halt lifted and re-commence trading 27 November 2013 Settlement of New Shares 2 December 2013 Allotment of New Shares 3 December 2013 New Shares commence tradi
Slide 34: 9. Conclusion
For personal use only 9. CONCLUSION 34
Slide 35: In summary, the BSSI acquisition fits well with Ansell's strategic goals
IN SUMMARY, THE BSSI ACQUISITION FITS WELL WITH ANSELL’S STRATEGIC GOALS AND IS EXPECTED TO MAKE A STRONG For personal use only CONTRIBUTION TO ANSELL’S FUTURE SUCCESS ACCELERATING DRIVING GROWTH PROFITABILITY • Adds new attractive • Strong synergy case verticals • BSSI has a cost • Leaves Ansell we
Slide 36: Appendix A: Key Risks
For personal use only APPENDIX A: KEY RISKS 36
Slide 37: Key Risk Factors
KEY RISK FACTORS For personal use only This section summarises some of the key risks that may affect the future performance of an investment in Ansell. This is not an exhaustive list of the relevant risks. If any of the following risks materialise, Ansell’s business, financial condition and operatin
Slide 38: Specific Risks
SPECIFIC RISKS For personal use only Ansell relies on the continuing operation of its information technology platforms. Interruption, compromise or failure of these platforms could affect Systems and Ansell’s ability to service its customers effectively. Ansell has completed a first wave of improvem
Slide 39: Specific Risks (continued)
SPECIFIC RISKS (CONTINUED) For personal use only While Ansell has strong market positions in its target product segments, in some markets, Ansell faces competition from lower-quality glove producers from Asia, including private label products. Ansell's financial performance or operating margins coul
Slide 40: Acquisition Risks
ACQUISITION RISKS For personal use only Completion of the acquisition is subject to US anti-trust approval under the Hart–Scott–Rodino Antitrust Improvements Act (“HSR Act”). It is possible that these clearances may be substantially delayed, not be forthcoming or subject to material conditions. The
Slide 41: Acquisition Risks (continued)
ACQUISITION RISKS (CONTINUED) For personal use only Loss of key There is a risk of disruptions in the supply of products or in customer service levels during the integration, which could result in the loss of some or customers all of BSSI's key customers BSSI currently outsources the manufacturing o
Slide 42: Acquisition Risks (continued)
ACQUISITION RISKS (CONTINUED) For personal use only Ansell undertook a due diligence process in respect of BSSI, which relied in part on the review of financial and other information provided by the vendors of BSSI. Despite taking reasonable efforts, Ansell has not been able to verify the accuracy,
Slide 43: Appendix B: International Selling Restrictions
For personal use only APPENDIX B: INTERNATIONAL SELLING RESTRICTIONS 43
Slide 44: International Selling Restrictions
INTERNATIONAL SELLING RESTRICTIONS For personal use only This document does not constitute an offer of new ordinary shares ("New Shares") of Ansell ("the Company") in any jurisdiction in which it would be Introduction unlawful. New Shares may not be offered or sold in any country outside Australia e
Slide 45: International Selling Restrictions (continued)
INTERNATIONAL SELLING RESTRICTIONS (CONTINUED) For personal use only The New Shares have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the "FIEL") pursuant to an exemption from the registratio
Slide 46: International Selling Restrictions (continued)
INTERNATIONAL SELLING RESTRICTIONS (CONTINUED) For personal use only This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other d
Slide 47: International Selling Restrictions (continued)
INTERNATIONAL SELLING RESTRICTIONS (CONTINUED) For personal use only Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of t